Israel: fund raising on the up

Funds raised by Israeli venture capital funds have taken a turn for the better reaching £118m in 2003, netting $28m, according to the Israel Venture Capital Research Center. The positive net amount raised in 2003 is in stark contrast to 2002’s net of -$145m.

Total capital available in Israel now stands at $1.15bn and around $750m of this amount is allocated for new high tech investments.

Funds raised last year included $46m by Evergreen for its fourth fund of $141m; $25m raised by Vitalife (of a $50m fund); €5m by Star Ventures’ SVE X fund; and $14m by JVP’s Annex Fund, JVP III.

Zeev Holtzman, chairman of the IVC research centre and Giza Venture Capital, said: “2003 marked the beginning of new fund raising after a long, difficult dry spell in the industry. Escalating interest in Israeli high-tech companies among foreign investors and the fact that 12 Israeli venture capital funds have embarked on raising new funds are clear signals that the environment has significantly improved. IVC forecasts that Israeli VCs will raise between $1.5bn and $2bn in 2004-2005.”

Israeli funds downsized their managed capital by returning capital to their investors for the second year in a row in 2003. Returns of capital by Israeli funds were $90m in 2003 compared with $221m in 2002.

IVC research also shows that since 1992, the 20 largest Israeli venture capital funds raised around $6.4bn that was exclusively allocated to investments in Israeli technology companies. Of this amount around $4.3bn had been raised between 2000 and 2003 (representing 83% of capital raised by all Israeli VC funds in the period).